BOTTOM OF THE MARKET
There has been a lot of speculation and negativity about when the BOTTOM will occur.
The BOTTOM will not be heralded by a Town Crier, walking around, shouting â€œThe Bottom has been reached!â€
The BOTTOM will not be accompanied by an article in the Wall Street Journal or New York Times, announcing â€œThe Bottom happened yesterday at 4:30â€
The BOTTOM will be completely different for you, than it will be for everyone else.
The reason for this is that you will not be buying the MARKET; you will be buying one house!
There is a fixation among some Buyers, that they be able to tell everyone that they got the absolute BEST price in the world! (Iâ€™m sure you know people like this.) This obsessiveness will surely not be rewarded, because there will always be someone who got a better deal.
There is a very old saying that; â€œTo have a good sale, the Buyer had to have been willing to pay more, and the Seller had to have been willing to take less.â€
The truth is, when you buy that house, any house, you are establishing the BOTTOM of the MARKET for THAT house. The clock starts on that investment. And considering that Real Estate is a long-term investment; if you can look back in five years and see that you made a good investmentâ€¦.
This whole controversy must take into consideration what you are buying:
If the object-of-your-affection is a Home for your family, then your priorities are skewed if you are obsessing on the Bottom-of-the-market: You are first, last and always buying a HOME for your family; complete with Security, a good neighborhood, good schools, 3 bedrooms, 1647 square feet, a wooded backyard, a 2 car garage, etc.
Sure you want to make a good buy, but that price should not be on the top of your list: Would you be happier in a crummy, crime-ridden neighborhood, with a house that is falling down, BUT, you made a great deal! Or, would your rather have the best house on the block, where you donâ€™t have to lock your doors at night, and your schools are the best in the State, for a good price? You choose.
The last consideration is the dynamic nature of the Market: By holding out for the BOTTOM of the MARKET, you are betting that, not only do the prices continue to drop, but also that:
1.) Interest rates do not increase
2.) The house you want is still available
3.) Your financial position does not change for the worse.
Consider that if you are looking for a home at $400,000 with a loan at 5%, your monthly payments could be $2689.
If you waited for the house to go down $10,000, but the interest rate went up 1%, your monthly payment would INCREASE to $2876!
If you waited for the house to go down $20,000, but the interest rate went up another .5%, your monthly payment would now be $2935!
(these are ball-park figures; please talk to your Mortgage specialists.)
If you are determine to play the interest-rate-game; know that the current Interest Rates are the lowest that they have been since just after World War II! Thatâ€™s 60 years!
But in the 80â€™s we had 12 and 13% home loans. (That would make that monthly payment $4,966!)